Made in the World Revisited

33 Pages Posted: 19 Nov 2019

See all articles by S. Miroudot

S. Miroudot

Organization for Economic Co-Operation and Development (OECD) - Trade Directorate (ECH)

Håkan S. Nordström

Independent

Date Written: October 1, 2019

Abstract

In the last decade, the concept of ‘global value chain’ (GVC) has become popular to describe the way firms fragment production into different stages located in different economies. The ‘made in the world’ narrative suggests that production today is global with inputs coming from all parts of the world before being assembled into final products also shipped all over the world. The empirical basis of this story has however been questioned. On the one hand, recent evidence indicates that there is some kind of ‘deglobalisation’ with a trade slowdown and lower levels of fragmentation of production. On the other hand, some authors suggest that supply chains are regional rather than global. In this paper, we offer a comprehensive review of the evidence based on the 2018 update of the OECD Trade in Value-Added (TiVA) database and indicators counting the number of domestic and foreign production stages, border crossings and geographic length of supply chains. The study covers 1995 to 2016. The made in the world narrative is correct when describing the rise of GVCs in the 2000s. But globalisation has reached a peak in 2012 and since then supply chains are becoming more domestic rather than more regional. The ‘erosion’ in globalisation (i.e. the reduction in the average length of supply chains since 2012) is 52 kilometres per year.

Keywords: fragmentation of production, vertical specialization, global value chain

JEL Classification: F14, L16, L23

Suggested Citation

Miroudot, Sebastien and Nordström, Håkan S., Made in the World Revisited (October 1, 2019). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2019/84, Available at SSRN: https://ssrn.com/abstract=3489137 or http://dx.doi.org/10.2139/ssrn.3489137

Sebastien Miroudot (Contact Author)

Organization for Economic Co-Operation and Development (OECD) - Trade Directorate (ECH) ( email )

2, rue André-Pascal
Paris Cedex 16, 75775
France

Håkan S. Nordström

Independent ( email )

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